10 Reasons You Don't Need To Write A Business Plan

If you are one of the new age of entrepreneurs who hates the
thought of doing a business plan as a first step in starting
your new venture, you will love this message. More and more
professionals agree that a better strategy is to explore and fine
tune your assumptions before declaring a specific plan
with financial projections based only on your
dream and passion.

In the process, you may save yourself considerable re-work
and money, or even decide that your dream needs more
time to mature, before you commit your limited resources, or sign
up with investors to a painful and unsatisfying plan.

I just finished a new book on this approach, Beyond the Business
Plan, by Simon Bridge and Cecilia Hegarty, which
outlines tradeoffs and recommends ten principles for every new
venture explorer. Here is my edited summary of their ten
principles, which might just convince you that you don’t need a
business plan at all, or at the very least, will help you write a
better one later:

1. A new venture is a means, not an end. A
new enterprise should be pursued primarily to help you achieve
your goals, like providing a better life for others,
satisfying a passion of yours, or enjoying the benefits of a
technology you have invented. In that context, it could be a
social enterprise, or even a hobby, in which case a business plan
may not be beneficial.

2. Don’t start by committing more than you can afford to
lose. New ventures are usually exploratory and
risky by nature, so don’t let any business plan process convince
you to commit more than you can risk as a person, should your
exploration fail. Start with an effectual approach, which
evaluates risk tolerance, and suggests a more affordable means to
an end.

3. Pick a domain where you have some experience and
expertise. Don’t handicap yourself by starting
something for which you have to build or acquire knowledge,
skills and connections from scratch. No business plan will save
you if you are just picking ideas at random or copying others,
just because the story sounds attractive.

4. Carry out reality checks and make appropriate
plans. Before a business plan has any validity,
some work is required to validate that your technology works, a
real market exists and your assumptions for cost and price are
reasonable. Don’t be totally driven by your own passions, the
emotional enthusiasm of friends or even third-party research.

5. The only reliable test is a real
one. Market research techniques for trying to
predict the market’s response to a new venture can be costly and
are often unreliable. Testing for real is the assumption behind
approaches such as Lean Startup. It is also what explorers do -- they
go and look, instead of trying to predict from a distance what
they will find.

6. Get started and build momentum. Too much
hesitation will kill any new venture, as markets move quickly and
difficulties mount. Getting started helps generate momentum and
creates a sense of accomplishment, which can carry your startup
through many obstacles. Early perseverance pays off.

7. Accept uncertainty as the norm. You will
never remove all uncertainties, so accept them, and plan your
activities in an incremental fashion. Too often, a business plan
is seen as a mechanism for eliminating uncertainty, lulling the
founder into complacency. Eliminate major uncertainties before
the plan and update any plan as you learn.

8. Look for new opportunities. Many useful
opportunities are either created by what you do early, or are
only revealed once you have started and can see out there. So
keep your eyes open and respond to new customers, markets and
partnerships. You will also find that looking hard helps
eliminate opportunities that are not right for you.

9. Build and use social capital. Social
capital is people and connections. No entrepreneur can survive as
an island. Social capital is as important as financial capital
for all ventures. As with all capital, you can use only as much
as you have acquired to-date. If you have no social capital, no
business plan will likely get you the financial capital you need.

10. Acquire the relevant skills. Three
basic skill sets are required for successful delivery of almost
every venture. These are financial management, production
capabilities and marketing and sales. If you don’t have the
relevant skills and knowledge, take time to build them or find
someone to partner with, before you attempt any business plan.

If you decide to continue building a conventional business after
exploring these principles, especially with investors and
employees other than yourself, I’m still convinced a business
plan is a valuable exercise. You should do it yourself to make
sure you understand all the elements of the plan and facilitate
communication of the specifics to your team and investors.

In essence, building a complete and credible plan is the final
test of whether your venture has legs. The entrepreneur lifestyle
is all about doing something you enjoy without undue stress,
uncertainty and risk. Are you having fun in your venture yet?